Do Current Political Events In Nicaragua Affect The Expat Community?

Plaza de la Independencia

Emerging Political Developments In A Popular Expat Market
Plus: “I’m A Single Woman With $50K To Spend” The Best Places To Buy In Medellín Beach Town Rental Opportunities

Since 2003 Nicaragua has been a popular destination for Americans living abroad. The property market has had its ups and downs, but overall the country has maintained a strong position as an expat destination with inexpensive properties, a low cost of living, and a friendly and welcoming people.

But this past week we’ve gotten a number of emails from people who are worried about the actions of President Daniel Ortega and today’s political situation in Nicaragua. Current events have resurrected old worries about foreigners’ property rights and political instability.

The Current Concerns Stem From An Interesting Background Story

Daniel Ortega was one of America’s Cold War villains… something that most boomers will remember.

Lee Harrison

Augusto Sandino, the ideological father of today’s Sandinistas

President Ortega was (and still is) the head of the FSLN (Frente Sandinista de Liberación Nacional), more commonly known as the Sandinistas. The Sandinistas are named for Augusto César Sandino, a well-known revolutionary figure who fought against the repeated invasions and occupations of Nicaragua by the United States. He was assassinated in 1934.

Daniel Ortega came to international prominence in 1979 when the FSLN overthrew Anastasio Somoza, a dictator and the last leader of the Somoza family dynasty that had ruled Nicaragua since 1936. Somoza hightailed it when his downfall was imminent, robbed the national treasury, and fled to Miami, leaving Nicaragua deeply in debt. He was assassinated by a Nicaraguan hit squad in Paraguay in 1980.

Considered a dictator, Somoza was not what you’d call a “man of the people.” His family owned about 20% of the arable land in Nicaragua and controlled about 60% of the country’s economic activity, which left most of the country’s wealth in the hands of the Somoza family and their associates.

Under Ortega’s leadership around 5 million acres of land were redistributed to about 100,000 families. This confiscation was intended to be Somoza land but was actually extended to include Somoza associates and supporters.

This act of “land redistribution” has affected Ortega’s reputation to this day.

Daniel Ortega as a 1979 revolutionary
Daniel Ortega Today

Daniel Ortega as a 1979 revolutionary, and President Ortega today

Recent Events Have Raised New Concerns About The Sandinistas

Nicaraguan elections will be held in November, 2016, and readers have recently expressed a few areas of concern.

One is the lack of term limits in Nicaragua. Term limits were abolished by the legislature in 2014, allowing President Ortega to run again in 2016. He’s been elected president in 1984, 2006, and 2011.

There’s also the lack of opposition. On June 8, 2016, the Nicaraguan Supreme Court decided a six-year-old lawsuit ruling that Daniel Ortega’s main opposition in the election—Eduardo Montealegre—was no longer the head of his party and was ineligible to run for election. Instead, they appointed an Ortega supporter, Pedro Reyes—leaving Ortega with no serious opposition. The Supreme Court in Nicaragua is dominated by appointees loyal to Ortega, so most assume the ruling and timing were politically motivated.

Finally, there’s his running mate. President Ortega named his wife Rosario Murillo as his running mate for the November election. This looks to many like the beginning of another family dynasty.

So that’s the problem: Nicaragua has what could be turning into a one-party system with a perpetual ruler… and it’s setting the stage for a liberal version of the Somoza dynasty.

Here’s My Take On These Developments

Generally, I’m neither here nor there on foreign term limits. We did without them in the United States until 1951 and found that presidential terms were usually self-regulating.

And I understand why the people in some Latin American countries are getting rid of term limits. In places like Nicaragua and Ecuador, they went through years of oppressive regimes. So when they get a president they like, they want the right to keep them in office.

With respect to the lack of opposition, I don’t think the court ruling really made any difference. According to a poll conducted in May, Ortega would get 64% of the vote, while the closest opposition would receive only 10%. Ortega was going to win anyway.

So while many will object to the situation—and the way it was brought about—the court ruling makes no practical difference in the outcome of November’s election.

As to Ortega’s running mate, I don’t see the selection of Rosario Murillo as having anything to do with expats in Nicaragua or the rights of foreign property owners. An intelligent, well-educated woman who speaks four languages, she’s descended from Sandino himself, joined the FSLN in 1969, and fought in the revolution. I have no reason to think she’s not qualified for the job.

Rosario Murillo, wife of Daniel Ortega, will be his running mate in 2016

Rosario Murillo, wife of Daniel Ortega, will be his running mate in 2016

Ortega has also come down on the side of foreign owners in the past, when the coastal law came out in favor of the foreign property owner.

The amount of setback from the ocean that constitutes public land was in dispute for many years, and when the final ruling was made by the Ortega administration, they could have drawn the line in a way that allowed them to confiscate tens of millions of dollars in mostly expat-owned properties.

But he didn’t do it. He stood by his pre-election commitment to the foreign property owner.

Mike Cobb, chief executive of ECI Development, has been in Nicaragua for more than 16 years. As developer of the Gran Pacifica Beach and Golf Resort, he’s a high-profile foreign developer and investor who’s brought many other investors to the country. During this time as an American businessman he’s enjoyed the support of center, left, and right administrations… including the support of Daniel Ortega and the Sandinista government. According to Mike, “the understanding and support of the Ortega administration has been exceptional.”

With respect to property confiscation, remember that the confiscation and redistribution of land in the early 80s was focused on Somoza’s huge land holdings. Somoza had also raided the treasury prior to fleeing to Miami, leaving the country deeply in debt. So they had reason to feel that he owed them.

There is no such motivation for land redistribution today. And even if there were, most expat-owned property (mostly colonial homes, townhouses, and beach property) would be of little value to the country’s agricultural scheme.

Finally, one-party domination is not the end of the world… just look at Mexico. The Mexican party PRI held the presidency for 72 years, until 2000. During this time, Mexico maintained strong growth and became the world’s #1 expat destination for Americans and Canadians. The PRI was voted out of office in 2000, and voted back in, in 2012.

Someday, Nicaraguans will probably vote the Sandinistas out. But until that time, Nicaraguans have the government they want and one that works for them.

Why Nicaragua Will Still Be A Great Place To Live

In my 15 years of living abroad—including the past 10 years as a Nicaragua property owner—my experience has taught me to separate expat living from politics.

So I judge a country on what its lifestyle is like in a practical way, not on the ideology of its current leaders… unless those leaders threaten our personal safety or property rights.

I’ve also learned that countries are far more pleasant places to live when the leadership has the support and approval of the people. In Nicaragua, Ortega’s approval rating is around 65% and has been as high as 80%. This is good by any standard.

Earlier this week I was discussing this article with editor Lynn Mulvihill, a longtime friend and colleague. She reminded me that 10 years ago she and I were going through the same exercise. That is, analyzing what Ortega might do when he took office and contacting people on the ground in Nicaragua for their input.

It made me realize that Daniel Ortega has a 10-year track record of maintaining expat property rights. He’s also improved Nicaraguan living conditions, making it a better place for us to live.

Here’s What I Recommend For Those Interested In Nicaragua

First of all, forget the politics. It’s usually a bad idea to select a country based on the current leader’s ideology, as long as it doesn’t affect the rights of property owners or expats.

Finally, it’s time to quit worrying about Daniel Ortega, and to get on with enjoying one of the best and least expensive expat venues in the Americas.

Lee Harrison
Editor, Overseas Property Alert

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Letters To The Editor
Hi Lee,

I am interested in looking for a year-round home. I was wondering where in Mexico is an affordable (US$50,000 give or take) retirement property that a single lady could buy, on or near a beach. My income would be about US$1,500 per month.

Is financing an option? What are residency options?

Leslie

Álamos, Mexico is the best place I’ve found for a single woman on her own, although it’s not on the water. You can read about it here.

I met a couple on the town square in Álamos that bought their house for US$32,000… but it needed work, and I’m not sure that it came in under US$50k. But renting in Álamos is a very economical option, and one I’d recommend.

The houses on the beach are hard to find in that price range. But to give you a good example, follow the link to see what you get for US$50k on the beach in Mexico (http://www.alamosrealty.com/detail.php?fatherID=40&TypeID=44&ListingID=258).

Financing is available in Mexico for qualified borrowers.

And residency is fairly simple, with reasonable thresholds for qualification. At this time, US$1,300 per month will qualify you for a temporary resident’s visa (up to four years), as will US$21,000 in savings. We will discuss residency options and property opportunities in Mexico in great detail at the Live and Invest in Mexico Conference, scheduled for Sept. 26–28, 2016. Learn more here.

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Lee,

My wife and I attended the conference in Medellín in April and spent a little time in the city after the conference. We are going to return and look into the possibility of living there part time.

What areas would you recommend we look in for an apartment? As you have lived in many different countries I thought you might have a good eye for value and safety.

Thanks in advance for your comments.
Jim

My favorite areas in Medellín are El Poblado, Laureles, and the adjacent municipality of Envigado. El Poblado is the best choice for limitless cafés and fine dining venues, and easy access to banks, shopping, and stores. Laureles has less of those things, but is a very likeable, homey, and walkable community… with the added advantage of being level, unlike El Poblado. Envigado is an upcoming area just south of El Poblado.

For lifestyle, I think all three are a terrific value right now. And for living, it’s strictly a matter of preference. If you’re renting your property out, the premium areas of El Poblado will perform best… although both Laureles and Envigado are quickly developing good rental markets, as more expats take up residence in Medellín.

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Dear Lee,

I enjoyed your article about going one step beyond, and it’s just the kind of thing I would do. But I intend to rent the property out for most of the year. I’ll probably do no monthly rentals, but rather a shorter-term, Airbnb kind of thing.

Is the short-stay rental potential good at these “one step beyond” places? Or should I stay with the main city. For example, should I focus on Santa Marta or Taganga?

David

This is a good question, and I can’t really generalize the answer. In each case it depends on the local market. I’ll stick with the examples from the article.

In the Santa Marta area I actually prefer Taganga for the Airbnb approach. Taganga attracts a younger crowd, many of whom use mobile apps as their tool of choice rather than looking to a formal property manager.

In Viña del Mar, I’d give the edge to the city itself. I think short-term renters would rather be there than in Reñaca.

And in Punta del Este I’d definitely choose that city over the nearby city of Piriápolis for a short-term unit.

Have a question? You can write to Lee here.

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